In September, German Vitamin B4 prices plummeted severely, following through from the previous month's decline, mainly because of lower demand and rebalancing of China inventories, Germany's primary source. Lower price pressure from Chinese exports and German importer inventory building prior to the Golden Week holiday also kept prices at bay. 2.4% inflationary pressures over the long term have caused consumers to roll forward spending and the European Central Bank to hold interest rates. Retaliation through cancellation of Peak Season Surcharges and shipper rollbacks of rates has placed the market in buyer-friendly terrain. Industry observers predict that impending price increase for Vitamin B4 in the months ahead as post-Golden Week demand picks up have caused suppliers to push back orders and negotiate contracts with caution. This volatility reminds us of issues in the international pharmaceutical industry as operators look to economic indicators to stabilize and forecast possible reversals in Vitamin B4 inventories and demand.
Key Highlights:
The cost of Vitamin B4, one of the primary nutritional supplements widely utilized in drugs and health supplements, dropped considerably in Germany during September, following last month's decline. The decline reflects a broader price decline in China, the main source of nutraceuticals such as Vitamin B4, due to softening demand and deep inventory re-pricing.
Several circumstances were responsible for the decline in Vitamin B4 prices in the German market. Firstly, lowered prices by Chinese traders directly influenced import prices into Germany. Secondly, local consumers had stocked inventory prior to the expected slowdown due to China's Golden Week holiday in early October, suppressing demand for new purchases in September. Combined, this stocking strategy and lowered price cuts along the supply chain played a significant role in driving Vitamin B4 prices downward.
The price easing in Germany is also tied to persistent inflation, which encourages consumers and businesses to postpone consumption. Initial indicators are that German inflation will remain at 2.4%, increase for the second month in a row. At its recent meeting, the European Central Bank (ECB) left interest rates steady for the second month in a row, an indicator of stability with no cuts in the near future.
External pressures have prompted shifts within the supply chain. The traditional Peak Season Surcharge (PSS), effective usually up to mid-October, has been put on hold. With muted shipping demand, carriers have reversed the General Rate Increase (GRI) of September 15 and have initiated rate cuts to offset declining volumes. This buyer-friendly tone has prompted a number of shipping lines to place current rates on hold up to October 14, contributing to the decline in Vitamin B4 prices.
Market analysts expect Vitamin B4 prices to move higher in the coming months under the pressure of possible recovery of demand post Golden Week and relaxation in inventories. Although poor downstream industry demand so far and oversupply have held prices at bay, players are watching the situation keenly, especially after the festive season, when demand patterns might become more apparent and be positive to drive Vitamin B4 prices upward.
As a reaction to the decline in Vitamin B4 price, German distributors and suppliers are revising their purchasing plans. Most of them are postponing orders, whereas others are canceling contracts to benefit from the reduced costs. The mood is cautious, with companies resisting enormous restocking until demand starts rising.
